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May 24, 2007

IEO2007: Liquid Fuels

The International Energy Outlook 2007 (IEO2007) presents an assessment by the Energy Information Administration (EIA) of the outlook for international energy markets through 2030. Selected excerpt's regarding total energy consumption and liquids are given in the remainder of this post. Other topics will be reviewed later.

In its reference case World marketed energy consumption is projected to increase by 57 percent from 2004 to 2030. Total energy demand in the non-OECD countries increases by 95 percent, compared with an increase of 24 percent in the OECD countries.

The IEO2007 reference case projects increased world consumption of marketed energy from all sources over the 2004 to 2030 projection period (left). Fossil fuels (petroleum and other liquid fuels, natural gas, and coal)

Liquids remain the dominant energy source, given their importance in the transportation and industrial end-use sectors; however, their share of the world energy market in this year’s outlook is lessened in the projection, as other fuels replace liquids where possible outside those sectors.

World consumption of petroleum and other liquid fuels, grows from 83 million barrels oil equivalent per day in 2004 to 97 million in 2015 and 118 million in 2030. liquids production is projected to increase by 14 million barrels per day from 2004 to 2015 and by an additional 20 million barrels per day from 2015 to 2030. OPEC producers are expected to provide more than one-half of the additional production in 2015 (8 million barrels per day) and more than two-thirds in 2030 (23 million barrels per day). Non-OPEC production in 2030 is projected to be 12 million barrels per day higher than in 2004, representing 35 percent of the increase in total world production over the 2004 total. The estimates of production increases are based on current proved reserves and a country-by-country assessment of ultimately recoverable petroleum, as well as the potential for unconventional liquids production.

In IEO2007, the projected increase in OPEC production (excluding Angola) is about 22 million barrels per day over the same period. There are several regions where production is restrained through 2015 in the reference case. For instance, in the key resource-rich countries of Mexico and Venezuela, expected investment levels are lower than those assumed in the IEO2006 reference case. In both countries, liquids production is projected not to expand (and, in Mexico, to decline) until after 2015, when economic decisions on investment allow production to improve. Also, North Sea production is projected to decline more rapidly than in last year’s outlook.

World production of unconventional liquids (including biofuels, coal-to-liquids, and gas-to-liquids), (left) which totaled only 2.6 million barrels per day in 2004, is projected to increase to 10.5 million barrels per day and account for 9 percent of total world liquids supply in 2030, on an oil equivalent basis, in the IEO2007 reference case.

The world oil prices in the IEO2007 reference case—and in the high world oil price case—also are projected to make previously uneconomical, unconventional resources available.

Reserve estimates for oil, natural gas, and coal are difficult to develop. EIA develops estimates of reserves for the United States but not for foreign countries. As a convenience to the public, EIA makes available global reserve estimates from the Oil & Gas Journal, World Oil, and BP’s Statistical Review of World Energy, shown below.

Since 2000, the largest net increase in estimated proved oil reserves has been made in Canada, with the addition of 174 billion barrels of Canadian oil sands as a conventional reserve. Iranian oil reserves have increased by 46.6 billion barrels, or 52 percent, since 2000. Kazakhstan has had the third-largest increase, 24.6 billion barrels, since 2000.

You may be disapointed in some of these projections, but I believe that they are as good as any available and if you wish to alter the course of energy consumption you must take steps such as energy conservation by using less energy and switching to energy sources that are more environmentally friendly.

Their liquids projections are a combination from many sources e.g. coal. But, there are many petroleum reserves that have not been developed due to economics. Only of late have the Canadian oil sands become economic to produce. There are very large tar sands oil reserves in northern Alaska not yet tapped. There are many older reserves now shut in that can be reactivated if the oil price remains high or goes higher. It's all a matter of money.

There are very limited other energy sources that can compete with coal and oil. The best of locations for wind, geothermal, solar, etc. are marginal and but a drop in the energy needs bucket. I think mans best chance to make a dent in hydrocarbon energy use is low cost electric power generation provided by nuclear.

Lets face reality... even the greenest of the green guys i.e. Southern California is planning more coal usage. See Southern Cal Edison's new 600MW power plant. Economics drives the material world... and well it should else our standard of living would reverse rather than progress.

Of course the very best thing mankind could do would be to lower the earth's population. The green movement should support population control around the world. This is so obvious... why don't they do it? Perhaps a new international law to kill all boys born on odd days.. JUST KIDDING... :) JohnBo

I guess I find these projections completely unrealistic. They are essentially projecting demand forward and assuming that supply will be there to meet it.

Promises about previously uneconomic resources becoming economic also seem unrealistic. The law of receding horizons will come into play, and the price will keep increasing, and the resources will continue to be uneconomic. Let me give an example - tar sands. The tar sands projects routinely have massive cost overruns, so the cost projections of the past are unrealistic. In addition, they use copious quantities of natural gas to warm the stuff up. Right now they use stranded natural gas - gas that is too far from a pipeline to get it to markets, and where it wouldn't be economic to build a pipeline. But they will use up all of that natural gas, and then some other technology will be needed. There is talk of building nuclear reactors to generate the heat to warm the stuff up, but this isn't a done deal.

The second point in this area is that the costs for producing these resources are paid for various things, but a large part of the costs are to in turn pay for energy, and as energy costs go up, then the production costs also go up. And when you reach the point where it takes a million BTU to produce a million BTU, you have effectively reached a point where it simply doesn't matter what the costs actually are - it is pretty much a guarantee that the project will never be economic.

"Of course the very best thing mankind could do would be to lower the earth's population. The green movement should support population control around the world. This is so obvious... why don't they do it?"

Good point. In the U.S., our population growth is largely driven by immigration. We should slash legal immigration quotas to under 100,000 per year for the next thirty years. Of course, it goes without saying that the U.S. should crack down on illegals and secure its borders... that's just basic common sense. The rest of the world likes to wag its finger at us for being energy hogs. Fair enough. Let's start fixing the problem by making sure we don't add to it. Let some other country be the world's new "lifeboat".

Eric you may be right that these projections are too great... however, having worked in the oil patch I can tell you there are lots of old oil fields that have been shut in because of excessive water production, etc. Also there are lots that have been discovered and not produced due to being difficult. One such field is just west of Anchorage.. it's big but fractured into several small pools. These dormant fields can be economic to produce when the price is right for handling the overhead. The government has all the data on these fields.

You know, no one has ever drilled at the south pole and only a tiny bit of the ocean has been sampled. It's like gold.. who knows how much there is?

I suppose the Canadian sands is a big gamble for the companies involved.. but the potential makes them try. It will all be interesting to watch. I sure hope the green energies can somehow begin to compete on a meaningful scale.

After reading this blog for a few months and other news it seems to me that nuclear is the only competing green technology of substance. JohnBo

These EIA estimates are purely a creation of a government bureaucracy for the consumption of the Congress and taxpayers - it is unlikely that the EIA would or could release any figures that would significantly challenge the vested interests of the buyers (the taxpayers.) In other words, these projections are not from peer-reviewed scientific analyses, but rather telling the public what it wants to hear.

Simply projecting forward numbers based on the past is a poor and misleading approach. A much better one would be a field by field analysis with a comprehensive look at every region of the globe, but unfortunately in many parts of the world data is kept secret.

Oh, and JohnBo, do you really think it would ever be reasonable to drill for oil at the south pole? The pole itself is covered with ever building and moving ice a couple of miles thick. Maybe on the Antarctic peninsula someday oil exploration may be possible, but forget inland Antarctica.

Someday all of these hearsay-based and wishful thinking futurists will have to come to terms with the limitations of FF production.

The good old boys have been drilling in shifting, sliding arctic ice for several years. Even drilling through ice over the Arctic Ocean. I don't think Antarctic ice will stop them. They are also drilling deeper in the oceans...etc. etc. So who knows how much they will find.

Yep FF are limited for sure... but there's a lot out there? Also, this EIA report includes coal, biofuels etc. in their liquids projections. And besides... how can you doubt a government report put together by bureaucrats? JohnBo :)

This will not be difficult. Peak oil is more a concept than an actual happening. It requires a bit of flexibility to go with the flow as it were.

As a doomsday scenario, there are those far more convincing and compelling than peak oil. A person must be able to live with her beliefs, so I encourage you to prune them vigorously, to allow the sunshine in.

I wonder whether we have been "educating" our school children on power conservation to the extent we should.The youngsters, once they understand and start taking action, can sane a lot of power consumption,I think.

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